The U.S. Court of Appeals for the Ninth Circuit, in an opinion filed August 28, 2026, in KalshiEX, LLC v. Assad, No. 25-7516, affirmed the District of Nevada order that dissolved KalshiEX, LLC’s preliminary injunction as it applied to sports event contracts. The panel said Kalshi did not show a likelihood that the Commodity Exchange Act (CEA) preempts Nevada gaming rules for those products. The sports event contracts were not “swaps,” the court held, because they were sports bets. Election contracts were sent back to the district court. This is a Nevada sports-contract ruling with a live circuit split, not a nationwide shutdown of prediction markets.
Bitcoin is not the story. CoinGecko’s site snapshot at 2026-08-29T00:08:47+00:00 priced bitcoin at $77,797, down 2.99% over 24 hours. Coinbase’s BTC-USD book at 2026-08-29T00:26:25Z sat near $77,941. The legal map changed. The coin tape did not.
What happened
Judges Ryan D. Nelson, Bridget S. Bade, and Kenneth K. Lee heard argument in San Francisco on April 16, 2026. Judge R. Nelson wrote the opinion. Judge Lee concurred. The district docket is 2:25-cv-00575-APG-BNW.
Kalshi is a designated contract market (DCM) registered with the Commodity Futures Trading Commission (CFTC). In January 2025 it self-certified sports event contracts: Super Bowl winners, NFL Draft first picks, prop-style over-unders and parlays, even the Super Bowl halftime opener. The opinion recites Kalshi’s advertising line, “the first app for legal sports betting in all 50 states,” and the mix: over 90% of Kalshi’s trades in 2025, representing 95% of its revenue, were sports related. Election contracts, offered since June 2023, are called a fraction of the business.
In March 2025 the Nevada Gaming Control Board sent a cease-and-desist letter. It said the sports products were a system of wagering on sporting events and that Kalshi was operating an unlicensed sports pool under Nev. Rev. Stat. § 463.160(1) and § 463.245(2). Kalshi sued and first won a preliminary injunction. After a later District of Nevada denial in a Crypto.com (North American Derivatives Exchange) case, Nevada moved to dissolve that injunction. The district court did so. Friday’s panel affirmed the dissolution for sports contracts and remanded the election-contract fight.
The CEA does expressly preempt state regulation of swaps traded or executed on a DCM. There was no dispute that Kalshi lists on a DCM. The panel still said the sports products were not swaps under 7 U.S.C. § 1a(47)(A)(ii). It also said Kalshi’s self-certification sat against CFTC Rule 40.11, which categorically prohibits swaps that involve, relate to, or reference gaming. The CFTC appeared as amicus. Exclusive jurisdiction was not treated as a shield for these sports books.
Context
Prediction-market operators have been running a preemption campaign: register as a DCM, self-certify event contracts, then tell state gaming boards that the CFTC occupies the field. We have already covered pieces of that campaign. The CFTC’s August emergency order in the New York fight was about keeping a federally registered venue open while states sued. Washington State’s geofence clocks were about a state court telling Kalshi to block residents. Today’s opinion is the first published Ninth Circuit take on whether sports event contracts even count as the “swaps” that trigger that federal overlay.
They are not the first appellate court to speak. On April 6, 2026, the Third Circuit, in KalshiEX, LLC v. Flaherty, 172 F.4th 220 (3d Cir. 2026), No. 25-1922, affirmed a New Jersey preliminary injunction for Kalshi. That majority treated the sports contracts as swaps and said the CEA preempts New Jersey gambling enforcement against them. The Ninth Circuit panel names that case, disagrees on the swap definition, and says the sister circuit “essentially disregarded” Rule 40.11. A Fourth Circuit appeal in KalshiEX LLC v. Martin, No. 25-1892, remains pending, per the opinion’s footnote. District courts have already split. That is a map, not a slogan.
Rule 40.11 is still on the books. The 2011 adopting release said the gaming bar was meant to “prevent gambling through the futures markets.” The Ninth Circuit notes that § 40.11(c) lets the CFTC pull a self-certified contract into a 90-day review, and that the agency never used that review on these sports listings (the opinion cites a September 30, 2025 CFTC item at ¶ 35563). Judge Lee’s concurrence says the court need not resolve the thorniest CEA Special Rule question because 17 C.F.R. § 40.11 currently bars gaming contracts. He adds that the CFTC has proposed revising that regulation, and that the rule “remains in the books and controls the outcome of this appeal.” Proposed is not adopted.
Kalshi argued that blocking Nevada sports listings would strand it under the DCM “impartial access” rule and invite CFTC trouble. The panel was unimpressed. It noted that regulated firms in Nevada already use geofencing, that Kalshi could do the same, and that the district court found no evidence the CFTC would punish a DCM for complying with a state court order. That is the same practical lever Washington already put on a clock. Narrative is cheap. A geofence is an operations choice.
Our read
I read Friday’s opinion as a sports-book classification, not a CFTC-jurisdiction trophy for Kalshi and not a death certificate for every event contract. The panel accepted that swaps on a DCM are federally occupied. It then refused to let a sports moneyline, a parlay, or a Super Bowl prop walk through that door by calling itself an “event contract.” If you sold “federal overlay in all 50 states” as the product, that pitch is now false inside the Ninth Circuit for sports. New Jersey, under Flaherty, still points the other way. That is a split you can trade. It is not a single national rule.
I am not updating the earlier CFTC-emergency-order read. That order was about New York trying to close a registered venue. This Nevada sports holding is about whether the listed product is a swap at all. Those can both be true at once. Venue risk here is state gaming enforcement plus a geofence, which is a form of counterparty and venue risk traders actually have to price. Liquidity stories that ignore the court map are just cheerleading. For how we treat a court PDF versus an outlet recap, see our guide to following crypto news without getting played.
Falsifiable claim: by 2026-11-28 23:59 UTC, if the published Ninth Circuit opinion in No. 25-7516 is reversed or vacated en banc (or by the Supreme Court) on the holding that Kalshi’s sports event contracts are not CEA swaps, the sports-bets classification is wrong. Separately, if by that same deadline the District of Nevada on remand enters an order treating those sports contracts as swaps under 7 U.S.C. § 1a(47)(A)(ii) and reinstates a preliminary injunction that again blocks Nevada’s sports-contract enforcement, the dissolved-injunction read is wrong.
What to watch
First, stay practice. A dissolved preliminary injunction means Nevada’s sports-enforcement threat is no longer frozen unless a later stay says otherwise. Watch Kalshi product notes and the Nevada Gaming Control Board docket. Second, the election-contract remand. The panel did not decide whether those contracts are swaps. Anyone flattening Friday into “prediction markets lose” is skipping a footnote. Third, Rule 40.11. If the CFTC amends the gaming prohibition, Judge Lee’s concurrence is the roadmap for a different fight. Until that amendment publishes, the Ninth Circuit treated the ban as controlling.
Fourth, the other circuits. Flaherty still stands in the Third Circuit. Martin is still on appeal in the Fourth. A Supreme Court petition is a plausible next filing. A petition is not a grant, and a grant is not a stay. Fifth, operations. If Kalshi starts a Nevada sports geofence, that is the Washington playbook moving west, not a mystery. We already walked that Washington clock. For more of this desk’s market analysis on structure over slogans, start there rather than with the coin tape.
Primary sources: the Ninth Circuit opinion in No. 25-7516 (filed August 28, 2026), the Third Circuit opinion in No. 25-1922 (Flaherty, April 6, 2026), and 17 C.F.R. § 40.11.